After the collapse of a short-lived Communist regime, according to historian István Deák: Between 1919 and 1944 Hungary was a rightist country. Forged out of a counter-revolutionary heritage, its governments advocated a “nationalist Christian” policy; they extolled heroism, faith, and unity; they despised the French Revolution, and they spurned the liberal and socialist ideologies of the 19th century. The governments saw Hungary as a bulwark against bolshevism and bolshevism’s instruments: socialism, cosmopolitanism, and Freemasonry. They perpetrated the rule of a small clique of aristocrats, civil servants, and army officers, and surrounded with adulation the head of the state, the counterrevolutionary Admiral Horthy.
First Hungarian Republic
On October 31, 1918, the Hungarian Democratic Republic was created by revolution that started in Budapest after the dissolution and break-up of Austria-Hungary at the end of World War I. The official proclamation of the republic was on November 16, 1918, and Mihály Károlyi was named as the republic's prime minister. This event also marked the independence of Hungary which had been ruled by the Habsburg monarchy for several centuries.
The First Hungarian Republic did not last long. Another revolution in 1919 marked the end of this state and the creation of a new communist state known as Hungarian Soviet Republic.
Hungarian Soviet Republic
The rise of the Hungarian Communist Party (HCP) to power was rapid. The party was organized in a Moscow hotel on November 4, 1918, when a group of Hungarian prisoners of war and communist sympathizers formed a Central Committee and dispatched members to Hungary to recruit new members, propagate the party's ideas, and radicalize Károlyi's government. By February 1919, the party numbered 30,000 to 40,000 members, including many unemployed ex-soldiers, young intellectuals, and Jews. In the same month, Béla Kun was imprisoned for incitement to riot, but his popularity skyrocketed when a journalist reported that he had been beaten by the police. Kun emerged from jail triumphant when the Social Democrats handed power to a government of "People's Commissars," who proclaimed the Hungarian Soviet Republic on March 21, 1919.
The communists wrote a temporary constitution guaranteeing freedom of speech and assembly; free education, language and cultural rights to minorities; and other rights. It also provided for suffrage for people over eighteen years of age except clergy, "former exploiters," and certain others. Single-list elections took place in April, but members of the parliament were selected indirectly by popularly elected committees. On June 25, Kun's government proclaimed a dictatorship of the proletariat, nationalized industrial and commercial enterprises, and socialized housing, transport, banking, medicine, cultural institutions, and all landholdings of more than . Kun undertook these measures even though the Hungarian communists were relatively few, and the support they enjoyed was based far more on their program to restore Hungary's borders than on their revolutionary agenda. Kun hoped that the Russian government would intervene on Hungary's behalf and that a worldwide workers' revolution was imminent. In an effort to secure its rule in the interim, the communist government resorted to arbitrary violence. Revolutionary tribunals ordered about 590 executions, including some for "crimes against the revolution." The government also used "red terror" to expropriate grain from peasants. This violence and the regime's moves against the clergy also shocked many Hungarians.
In late May, Kun attempted to fulfill his promise to restore Hungary's borders. The Hungarian Red Army marched northward and reoccupied part of Slovakia. Despite initial military success, however, Kun withdrew his troops about three weeks later when the French threatened to intervene. This concession shook his popular support. Kun then unsuccessfully turned the Hungarian Red Army on the Romanians, who broke through Hungarian lines on July 30, occupied Budapest, and ousted Kun's Soviet Republic on August 1, 1919. Kun fled first to Vienna and then to the Russian SFSR, where he was executed during Stalin's purge of foreign communists in the late 1930s.
Counterrevolution A militantly anti-communist authoritarian government composed of military officers entered Budapest on the heels of the Romanians. A "white terror" ensued that led to the imprisonment, torture, and execution without trial of communists, socialists, Jews, leftist intellectuals, sympathizers with the Károlyi and Kun regimes, and others who threatened the traditional Hungarian political order that the officers sought to reestablish. Estimates placed the number of executions at approximately 5,000. In addition, about 75,000 people were jailed. In particular, the Hungarian right wing and the Romanian forces targeted Jews for retribution. Ultimately, the white terror forced nearly 100,000 people to leave the country, most of them socialists, intellectuals, and middle-class Jews.
Monarchy restored
In 1920 and 1921, internal chaos racked Hungary. The White Terror continued to plague Jews and leftists, unemployment and inflation soared, and penniless Hungarian refugees poured across the border from neighboring countries and burdened the floundering economy. The government offered the population little succor. In January 1920, Hungarian men and women cast the first secret ballots in the country's political history and elected a large counterrevolutionary and agrarian majority to a unicameral parliament. Two main political parties emerged: the socially conservative Christian National Union and the Independent Smallholders' Party, which advocated land reform. In March, the parliament annulled both the Pragmatic Sanction of 1713 and the Compromise of 1867, and it restored the Hungarian monarchy but postponed electing a king until civil disorder had subsided. Instead, Admiral Miklós Horthy — a former commander in chief of the Austro-Hungarian navy — was elected regent and was empowered, among other things, to appoint Hungary's prime minister, veto legislation, convene or dissolve the parliament, and command the armed forces.
Sándor Simonyi-Semadam was named prime minister of the restored Kingdom of Hungary. Charles IV was the last emperor of Austria and the last king of Hungary. Charles was not asked to fill the vacant Hungarian throne because Horthy knew the Allies would consider restoring him an act of war. The government of Horthy immediately declared null and void all laws and edicts passed by the Karolyi and Kun regimes, in effect renouncing the 1918 armistice. Horthy's authoritarianism and the violent anti-communist backlash resulted in interwar Hungary having one of the quietest political landscapes in Central Europe. Later on, when he wished to take out loans from the West, they pressured him into democratic reforms. Horthy only did as much as he absolutely had to, since the Western powers were geographically distant from Hungary and soon turned their attention to matters elsewhere.
Horthy appointed Pál Teleki as prime minister in July 1920. His right-wing government set quotas effectively limiting admission of Jews to universities, legalized capital punishment, and to quiet rural discontent, took initial steps towards fulfilling a promise of major land reform by dividing about from the largest estates into smallholdings. Teleki's government resigned, however, after the former Austrian emperor, Charles IV, unsuccessfully attempted to retake Hungary's throne in March 1921. King Charles' return split parties between conservatives who favored a Habsburg restoration and nationalist right-wing radicals who supported election of a Hungarian king. István Bethlen, a nonaffiliated, right-wing member of the parliament, took advantage of this rift by convincing members of the Christian National Union who opposed Karl's re-enthronement to merge with the Smallholders' Party and form a new Party of Unity with Bethlen as its leader. Horthy then appointed Bethlen prime minister.
As prime minister, Bethlen dominated Hungarian politics between 1921 and 1931. He fashioned a political machine by amending the electoral law, eliminating peasants from the Party of Unity, providing jobs in the bureaucracy to his supporters, and manipulating elections in rural areas. Bethlen restored order to the country by giving the radical counter-revolutionaries payoffs and government jobs in exchange for ceasing their campaign of terror against Jews and leftists. In 1921, Bethlen made a deal with the Social Democrats and trade unions, agreeing, among other things, to legalize their activities and free political prisoners in return for their pledge to refrain from spreading anti-Hungarian propaganda, calling political strikes, and organizing the peasantry. In May 1922, the Party of Unity captured a large parliamentary majority. Charles IV's death, soon after he failed a second time to reclaim the throne in October 1921, allowed the revision of the Treaty of Trianon to rise to the top of Hungary's political agenda. Bethlen's strategy to win the treaty's revision was first to strengthen his country's economy and then to build relations with stronger nations that could further Hungary's goals. Revision of the treaty had such a broad backing in Hungary that Bethlen used it, at least in part, to deflect criticism of his economic, social, and political policies. However, Bethlen's only foreign policy success was a treaty of friendship with Italy in 1927, which had little immediate impact.
Postwar political and economic conditions
Hungary's signing of the Treaty of Trianon on June 4, 1920, ratified the country's dismemberment, limited the size of its armed forces, and required reparations payments. The territorial provisions of the treaty, which ensured continued discord between Hungary and its neighbors, required the Hungarians to surrender more than two-thirds of their prewar lands. Romania acquired Transylvania; Yugoslavia gained Croatia, Slavonia, and Vojvodina; Slovakia became a part of Czechoslovakia; and Austria also acquired a small piece of pre-war Hungarian territory. Hungary also lost about 60 percent of its pre-war population, and about one-third of the 10 million ethnic Hungarians found themselves outside the diminished homeland. The country's ethnic composition was left almost homogeneous. Hungarians constituted about 90 percent of the population, Germans made up about 6 to 8 percent, and Slovaks, Croats, Romanians, Jews, and other minorities accounted for the remainder.
New international borders separated Hungary's industrial base from its sources of raw materials and its former markets for agricultural and industrial products. Its new circumstances forced Hungary to become a trading nation. Hungary lost 84 percent of its timber resources, 43 percent of its arable land, and 83 percent of its iron ore. Because most of the country's prewar industry was concentrated near Budapest, Hungary retained about 51 percent of its industrial population, 56 percent of its industry, 82 percent of its heavy industry, and 70 percent of its banks.
Economic development